NYC debates crackdown on counterfeit luxury goods

A shopper looks through a display of purses on Canal Street in New York last Tuesday.AP

BARGAIN HUNTERS from around the world flock to Manhattan's Chinatown for legally sold bags, jewellery and other accessories bursting onto sidewalks from storefronts along Canal Street.

But hidden around the city are goods labelled 'Prada' or 'Louis Vuitton' or some other luxury brand — counterfeits sold for a pittance. In some cases, handbags going for US$2,000 on Fifth Avenue can be had downtown for, say, US$20.

They're seductive fakes.

And until now, the law enforcement focus has been on catching the sellers.

If a proposed bill passes the City Council, customers caught buying counterfeits also could be punished with a fine of up to US$1,000, or up to a year in prison.

On the street, day after day, a hard-sell routine is repeated.

"Rolex! Chanel!" a man on a street corner whispers to a passer-by.

"Get this before the police do!" he adds with a grin.

Buyers are walked to a designated spot where they're quietly shown photos of the desired goods. Choices are then signalled to another person who disappears to an undisclosed location — a vendor's back room, a nearby apartment, the back of a van.

The item arrives within minutes, and cash exchanges hands.

Council member Margaret Chin, who introduced the bill, said at a public hearing last Thursday that counterfeits deprive the city of at least US$1 billion in tax revenue a year that could support community improvements. The Democratic lawmaker expects a vote sometime in the coming months.

Once visitors get their goods, usually packed in unmarked black plastic sacks, "they leave - they don't patronise small businesses in our community," Chin said. "This is not helping us, it's just giving us a very, very bad image."

"Hopefully, this law will cut down on demand," she said.

At the hearing Thursday, Council member Peter Vallone Jr. said he would not support the bill. Vallone said "a year in jail seems a little tough" for buying fake goods.

Some worry about how the new law would be enforced and whether it would hurt both businesses and buyers.

"How would I know I'm not supposed to buy something, that there's a fine?" said Ashley Hunter, 30, of Kershaw, South Carolina, who was browsing at a stall selling scarves.

"You've got to be kidding," said Ron Dennis, 43, a licensed vendor who sells glass pipes off a table on the street and is an occasional customer, too. "I definitely would never come back. It's very unfair. You're demonising a whole neighbourhood."

Chin said city officials would launch a very visible campaign informing the public and tourism companies, distributing flyers and posting signs.

In France, everyone seems to know that buying or carrying fakes is a crime, says Valerie Salembier, a former publisher of Harper's bazaar magazine who planned to testify at Thursday's hearing. She now runs the non-profit Authentics Foundation dedicated to consumer education about the counterfeit industry.

Air France warns tourists to stay away from fake goods, because anyone in the country "risks fines of up to €300,000" — that's more than US$478,000 — "and up to three years in prison for the mere possession of a counterfeit item."

"It's why they don't have a big problem with counterfeits in France, Salembier says.

In New York, one high-profile designer isn't waiting for the city to take action.

Tory Burch has filed lawsuits in Manhattan federal court against four wholesalers peddling counterfeit versions of her jewellery with the brand's TT logo.

For years in Chinatown, logo-bearing items were openly displayed, spread across sidewalks in burlap scooped up by vendors who'd run if police appeared.

Only the most daring do that now, since Mayor Michael Bloomberg and the police stepped up well-organised raids in recent years that have resulted in eliminating whole blocks of shops and demolishing a building that served as a warehouse.

"I've been watching the raids in these places," said Dennis, the licensed vendor who sported a counterfeit Michael Kors watch.

Some shops now use stealth tactics to keep sales rolling.

Asked if he carries "designer bags," one merchant points to a knockoff on a shelf, explaining that he "can make it into a designer bag if you wish."

He steps behind a curtain, emerging with a metal plate bearing the name 'Prada'. He says he'll put the label on whichever bag a customer picks.

If caught, peddlers typically spend a few days behind bars, pay a fine and get their goods confiscated, says Dennis. And then they're on the street again.

When police lead a raid, word spreads quickly and counterfeit items disappear - for at least a day, anyway.

The New York legislation, if passed, would be the first in the United States to criminalise the purchase of counterfeits, Salembier said. "I support it completely, it is absolutely necessary."